US can save $100 bln if EPA flexible on power plant rules-study

Friday, 5 Oct 2012 | 4:08 PM ET

SHARES

* EPA regs could cost economy $275 bln in 2010-2035

* EPRI wants a couple more years to comply with rules

* Cheap natgas could cause 100 GW of coal retirements

Oct 5 (Reuters) - The U.S. electric power industry's research arm released a study on Friday saying power companies could save the economy about $100 billion between 2010 and 2035 if U.S. pollution rules were more flexible.

The Electric Power Research Institute (EPRI) estimated it would cost the U.S. economy up to $275 billion to meet current and pending U.S. Environmental Protection Agency (EPA) regulations from 2010-2035 if the current timeline is followed.

The study released Friday was an update of a study issued in May.

The EPA wants electric companies to reduce power plant emissions, reduce the amount of water used to cool generating facilities and regulate the handling and storage of coal ash.

EPRI said its proposed "flexible path" would reduce costs while achieving the same level of compliance.

Under the current course, EPRI said as little as 203 gigawatts (GW) of existing coal-fired capacity would remain financially viable, with up to 61 GW retired or converted to burn other fuels.

In EPRI's "flexible" alternative, 288 GW of coal generation would remain financially viable with only 36 GW retiring or converted to burn other fuels.

The United States has about 1,039 GW of generating capacity, including about 317 GW fueled by coal. A gigawatt represents 1,000 megawatts. One megawatt is enough power for about 1,000 homes.

Power generators have already said they would plan to shut more than 30 GW of coal-fired generation between 2012 and 2016, EPRI said citing federal data. See Reuters factbox on coal units to retire or convert to other fuels

EPA regulations require controls be in place to reduce mercury by about 2015, sulfur dioxide by about 2015, nitrogen oxide by about 2018 and cooling water intake by about 2018.

Under EPRI's flexible approach, the utilities would get a couple more years to reduce the emissions.

Separately, EPRI said its study was very sensitive to natural gas prices.

If natural gas prices average $6.50 per million British thermal units (mmBtu) from 2010-2035 as the U.S. Energy Information Administration (EIA) has forecast, EPRI estimated about 55 GW of coal capacity could retire or convert to other fuels.

But if natural gas prices average $8.50 per mmBtu from 2010-2035, EPRI forecast just 30 GW of coal could retire or convert.

And at an average natural gas price of $4.50 per mmBtu over that time, EPRI forecast over 100 GW of coal could retire or convert.

Over the past decade, natural gas has traded in a wide range from less than $2 per mmBtu to more than $15, averaging about $6. The current spot cost is $3.40.

The biggest coal fired generating companies in the United States include units of American Electric Power Co